Economic growth revised up to 1.2 percent in the first quarter

Economic growth in the first quarter was better than previously estimated, the government reported Friday.

Gross domestic product grew at a 1.2 percent annualized rate in the first three months of 2017, the Bureau of Economic Analysis said Friday, rather than the 0.7 percent it had previously reported. Business investment and household spending accounted for much of the improvement.

With Friday's revision, the drop-off in growth from the end of 2016, when GDP grew at a 2.1 percent clip, appears less worrying.

Furthermore, although 1.2 percent is a weak mark, economists in the private sector and at the Federal Reserve expect it to pick up in the months ahead.

In notes from the Fed's May meeting released this week, economists at the central bank judged that the soft first quarter numbers were likely to prove "transitory," meaning that do not signal an underlying weakening of the economy.

Gus Faucher, the chief economist for PNC, noted Friday morning that household spending should increase as jobs growth and wages rise, and that business investment and housing are also picking up. He projected that GDP growth should jump to 4 percent next quarter, and to 2.3 percent for 2017 as a whole. "Growth should be at roughly that same pace in 2018, with the potential for stronger growth if the administration and Congress can pass tax cuts and infrastructure spending," he added.

President Trump has set a goal of 3 percent economic growth, sustained over time. That would be a major improvement over the post-crisis era in the U.S., when the economy under Obama grew at roughly a 2 percent clip.

Friday's report, although better than the first reading, shows how far there is to go to reach that goal. Trump's budget, released Tuesday, envisions the economy slowly ramping up to a 3 percent growth rate in the years ahead as the administration phases in tax reform, regulatory relief, and new trade deals.